How Obamacare Will Hurt Tax Payers and Stop the Economic Recovery

Barrack Obama would like his first term to be remembered by promoting "equality" and ushering in transformational entitlements like the "Patient Protection and Affordable Care Act." However, not only will Obama violate the individual liberty of millions of Americans, his policies will only further delay an economic recovery by raising costs to businesses who hire and taxpayers who spend.

Obama's "Obamacare," forces the positive right for everyone to have government-sponsored health insurance at the expense of the negative right to refuse. As was stated by Supreme Court Justice Anthony Kennedy in the Supreme Court hearings on the issue, “The law (Obamacare) changes the relationship of the federal government to the individual in a very fundamental way.”

After two years of heated debate, the Obamacare law is starting to unveil itself. The more we hear, the less fair and equal it seems.

Reality of the Cost to Taxpayers:

Costs Much Higher Than Promised

The Congressional Budget Office (CBO) has raised its initial 10 year costs estimates from $940 billion to $1.76 trillion. Since the government has no money of its own, it must take close to a trillion dollars more from tax payers in order to afford the first 10 years of Obamacare. Every year after 2021, Obamacare will cost more than a quarter trillion dollars based on today's estimates. These numbers will only get worse in time because moral hazard will necessarily cause the amount of claims to rise relative to the cost. For example, how much music do you download on bitTorrent (free) vs. iTunes ($1.00/song)?

Not only have aggregate costs risen, but projected premiums for families have also gone up. Initially, health reforms were projected to save families over $2,500, but more recent studies by the CBO estimate such premiums costing more than $1,500 above what they otherwise would have.

Some Rights Deemed More Important Than Others

If these costs don't bother you, consider the encroachment on individual liberty. Private institutions such as Catholic hospitals will be forced to not only fund through taxes, but actively supply, drugs that cause abortion, free contraceptives, and sterilization. Forcing these actions on Catholic hospitals are clear violation of their liberties. If institutions have the right to perform abortions, others should also have the right to refuse.

Separation of Powers?

Even more shocking is the increase in the power of the federal government through this legislation. Obamacare interprets the Commerce Clause as a de facto power for forcing all Americans to purchase insurance. This is a clear infringement on the separation of powers defined in the Constitution. "Few and enumerated powers" can not mean that the federal government has the ability to subjugate long held negative rights of Catholic institutions not to offer contraceptive options with new positive rights which force others into action. Supreme Court Chief Justice John Roberts summed it up nicely when he stated yesterday that, “Once we accept the principle, I don’t see why congress’ power is limited.”

For this reason, the legislation is still extremely unpopular and being debated at the highest court in the land. The latest ABC-Washington Post poll show that Americans oppose the law 52% to 41% while 67% think the Supreme Court should strike down the entire law or at least take out the provision that forces people and businesses to purchase insurance. This should come as no surprise to Americans who saw Republican Scott Brown take Ted Kennedy's Senate seat in large part due to the health care reform battle going on in Congress. Kennedy was a staunch proponent of universal health care, and no Republican has held that seat since the 1970's. Democrats also lost their majority in the House as a direct consequence of the anti-liberal nature of the law and the manner in which it was passed, without a single Republican vote. Nancy Pelosi famously said, “We have to pass the bill so you can find out what is in it.” March 22, 2012 marked the two year anniversary of its signing, American’s still don’t like it and we are finding out that it erodes our liberty and solvency.

Here is how it will cause a delay in economic recovery:

The Cost of Dropped Coverage

The CBO estimates that up to 20 million people will lose their coverage between the years 2019-2022 after Obamacare goes into effect. The reason is because it is going to cost businesses much more than expected.

So much, that they will opt out. Of course, this breaks a key promise made by the president during the debate over the legislation that, “If you like your coverage, you can keep it.”

Based on the CBO, most studies show that 10% of all business owners (small and large) are "very likely" to completely drop insurance coverage for their employees.

The cost of this massive “reshuffling” of benefits and switching of coverage for all those dropped will be massively expensive for businesses. Especially for the first five years as they acclimate to all the new rules of compliance, the incur the costs of law suits, filing fees and penalties for rule infractions. To put it in perspective, large companies like John Deer and Caterpillar have publicly stated that the cost of compliance with Obamacare will be over $100 million each.

Cost of “Finding what’s in the bill”

Since the crash in 2008, a Heritage Foundation study shows that job growth has steadily increased by $67,600 jobs per month starting in January 2009. However, just days following the president's signing of Obamacare into law in March of 2010, job growth flat-lined to just $6,500 jobs per month until June of 2011.

This should not surprise anyone. As businesses wait for Congress to "tell them what is in the bill," they hold off on issuing new hire contracts since employee health care benefits and compliance costs are built into wages. It follows, that because the projected costs of health care have skyrocketed as of late, that these same costs go into wages, and Obamacare is expected to be upheld by the Supreme Court; we can expect unemployment to not rebound due to employers lack of confidence in the bills ability to control costs, drastically increase compliance, and establish a clear set of rules in a timely manner.

I am interested in Austrian Economics and how the Austrian Business Cycle applies to our current financial collapse and recession. I am also intensely interested in how New Institutional Economics (NIE) can explain how our system of government channels a new set of underlying incentives that produce unintended results.
I majored in Economics and Business Administration at Hillsdale College. I have been a mortgage broker during the housing crisis, interned at Mercatus/IHS at George Mason University and currently work in commercial real estate in Gerogetown (DC).